Levinsohn, who has been at Yahoo for two years, assumed the role of interim chief executive in May, after Scott Thompson resigned amid health issues and the appearance of a bogus qualification on his CV.
Levinsohn was widely tipped to take the chief executive role, after he instigated a number of changes at the business in the short time he was in charge, which won him praise.
These include settling Yahoo's patent dispute with Facebook, pulling the plug on its social news reader Livestand and appointing his former Fox Interactive Media colleague Michael Barrett as the company's new revenue officer.
However earlier this month, in a surprise move, Yahoo's board appointed Marissa Mayer, Google's vice-president of local, maps and location services to the top role.
Levinsohn is reportedly leaving the company immediately. It is not known whether he has a job to go to and Yahoo has not confirmed a replacement for him.
Levinsohn joined Yahoo in 2010 as executive vice president, Americas.
Prior to that he was managing director of investment company Fuse Capital and previously worked as president of Fox Interactive Media at News Corporation for six years.
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